The continuation of the conflict in Ukraine could, over the long run, imperil the recovery of the western Balkans. That’s why political de-escalation in Europe provides the basis to restore rates of expansive growth and sustainable development to the serbian economy
Despite the fact that the current crisis is a consequence of tragic events in Ukraine, new economic circumstances that bring both risks and opportunities are being created in Europe.
Specifically, the current situation threatens to develop into a global conflict of interest, primarily in an economic sense. The International Monetary Fund noted in its latest report that we are seeing a kind of economic deglobalisation, or the leading economies turning towards cooperation within regional economic groups, which creates a kind of trade-off between more reliable supplies and economic efficiency.
We already saw overburdening and stagnation emerging during the pandemic, leading to supply chain breakdown, and the current political crisis shows that such breakdowns don’t necessarily have to be caused by natural factors. Hence the re-emergence of the topic of shortening the supply chains of large European companies by moving operations closer to their home countries, while, on the other hand, many countries are now considering reducing their economic dependence on faraway and potentially rival markets.
Serbia and the other countries of the Western Balkan region have for years underutilised their economic potential and shown themselves to be extremely sensitive to external risks. Although recent advances have been recorded in terms of regional cooperation towards the establishing of a common regional market, joining the EU’s common market – and doing so in the most favourable and inclusive possible way – remains the main economic goal of the governments of the region.
The political crisis that’s hit eastern Europe has launched a wave of refugees and migrants who are seeking more promising places to live and work in many european countries including Serbia, which would be a positive development for our labour market
In that sense, there are indications of increased interest among foreign direct investors in transferring part of their operations from faraway markets to the region. The standout activities of interest in this regard include agribusiness, the auto industry and the IT sector, all of which can provide a stronger impetus to the growth and development of Serbia and the region.
On the other hand, the political crisis that’s hit Eastern Europe has launched a wave of refugees and migrants who are seeking more promising places to live and work in many European countries, and are often opting for Serbia as a country with a similar culture, a good climate and more affordable living conditions. These are relatively young, highly-educated people who are mostly employed in the fields of IT, consulting services and trade. Considering their ability to quickly integrate into the local environment, the Serbian economy could benefit a lot in terms of bolstering labour market supply, but also improving its general demographic structure, given that European countries are generally maintaining their population levels through a positive migrant balance.
However, we should conclude by stressing that the continuation of conflict in Ukraine may, over the long run, imperil the recovery of the Western Balkans, and particularly other developing countries worldwide. That’s why political de-escalation in Europe provides the basis to restore the Serbian economy’s rates of expansive growth and sustainable development.